Archive for 2014

At a recent Capitol Hill briefing hosted by WISER, Wells Fargo released new research on the financial differences between Millennials and Boomers. The 2014 Wells Fargo Millennial Study surveyed more than 1,600 U.S. adults aged 22-33 (Millennials) and more than 1,500 U.S. adults aged 49-59 (Baby Boomers). The event also featured recently released results from the FINRA Investor Education Foundation’s 2012 National Financial Capability Study, which sampled 25,509 respondents age 18 and up, including 6,865 Millennials. Both studies found that Millennials are struggling with debt and saving for retirement. Here are some facts and findings from the research:

Millennials experienced the Great Recession early in their lives and careers, entering the workforce during a time of uncertainty. They had difficulty finding jobs and becoming financially stable, despite being the most educated generation in U.S. history.

This experience has taught Millennials to think about their financial future. Eighty-percent said they have learned to save for financial problems down the road, yet they still face serious financial concerns.

Debt

Half of Millennials are concerned about too much debt, and 42% say it is their “biggest financial concern currently.” Despite their concern, many are still taking on more debt, and 23% outspend their income. Most of this debt is accumulating in credit card debt, which represents 16% of Millennials’ overall debt. Student loans are also taking their toll. Millennials experienced large increases in education, and more of them are attending college and post-graduate schools than previous generations. Nearly one-third of Millennials said that paying off student loans is their top financial priority.

The result of this debt? Four in 10 Millennials (40%) feel overwhelmed by debt pressure. Only 23% of their parents’ generation feels this way.

It can be difficult to think about the future when you are overwhelmed by your current finances, which Millennials’ retirement savings habits demonstrate. Get tips on how to address your debt now.

Retirement

Millennials are saving, as the Great Recession taught them, but only 55% of them are saving specifically for retirement. Most that are saving are doing so at low rates (1-5% of their income).

They also seem uncertain about how much to save and how important it is to save for retirement starting now. In responses to financial literacy questions, Millennials did great on questions about interest rates, but poorly on those focusing on inflation rates. This lack of financial literacy could have long-term consequences.

Additionally, 40% of Millennials have “no idea” how much money they need in retirement, while 31% say that they will need under $1 million. Without an understanding of inflation, Millennials may save less than they actually will need in retirement.

Both studies found disparities between genders. Millennial men are earning more ($77,000) than women ($56,000) and therefore are saving at higher rates (61% compared to 50%). Women also have lower financial literacy levels, are less likely to have emergency savings, and are less likely to hold investment accounts.

Similar to women in the Baby Boomer generation, Millennial women also report lower levels of confidence in being able to meet their financial goals. In general, Millennials are optimistic about their financial futures. When broken out by gender, however, males are more confident. Only 63% of Millennial women are confident they will be able to save enough for their desired lifestyle in the future, compared to 80% of men. Women are also more likely to feel overwhelmed by their finances (45%) than men (33%).

Feeling overwhelmed yourself? Here are 5 actions women can take to help save for retirement.

“These are difficult roles, exhausting roles, both physically and mentally. Women, in particular, are more likely to take on the obligation of caregiving – meaning the burdens can fall more heavily on them. Caregivers are the unsung heroes of so many families, so many communities…”

This Memorial Day, as we remember those who gave their lives for our country, may we also honor our veterans and the spouses and family members who care for them. Much information about caregivers focuses on long-term elderly care, but our returning veterans often need assistance re-entering civilian life and recovering both from physical and mental wounds. Their families often step up and assume caregiving duties.

Caregiving for Veterans

According to “Caregivers of Veterans – Serving on the Homefront,” a report by the National Alliance for Caregiving, 96 percent of all veteran caregivers are women (up from 61 percent of all adult caregivers). The report also shared that 47 percent of veteran caregivers had to take early retirement (only 9 percent of adult caretakers did this) and 50 percent claimed high financial hardship.

In a recent speech on caregivers of veterans, Dr. Jill Biden mentioned a special program called the Caregiver Rule, in which veteran caregivers can enroll for assistance through Veteran’s Affairs (VA). The Caregiver Rule covers some of the traditional costs associated with caregiving. It allows caregivers of qualifying veterans to receive a monthly stipend, access to health care insurance, mental health services and counseling, respite care, coverage of travel expenses, and comprehensive VA Caregiving training. This rule only covers post-9/11 veterans, but there are other services offered to help caregivers through the VA.

Caregivers of veterans face a different set of circumstances than other adult caregivers, and in response, the VA has created a network of support. To learn more go to www.caregiver.va.org. Other services the VA offers to veterans and their caregivers include:

Mother’s Day is fast approaching. Instead of the typical flowers or card, show you care by considering how you can help your mother or grandmother organize or better understand her finances. This is not always an easy conversation to have, but it is a very important one that can help to make sure the special women in your life are well prepared for their later years.

Start by letting her tell you what she knows or wants to share about her finances, and do not assume you know all the relevant information. From what your mother/grandmother shares, you’ll also be able to gain insight into her understanding of her own finances. If you’re not sure how to begin, we have five questions to help start the conversation:

Can you make ends meet; are you worried about depleting all of your savings?

Do you have a competent tax and financial advisor?

Are you struggling with prescription drug costs?

Are you getting all the medical care you need?

Have you been approached to get involved in charitable contributions, investment schemes, business ventures or loans that seem questionable?

For recommendations and solutions to some of the issues that may arise take a look at our more detailed explanation of these questions.

The next step is making sure that you know about important documents. 66 million people in America provide unpaid care for relatives or friends. You never know if you may become one of them. It is better to be prepared now, than regret it later. If you will play a key role in assisting your mother with any financial matters should she no longer be able to manage them herself, ask where she keeps her financial and legal documents. Make sure you know where to find passwords and identification numbers for bank accounts, credit cards, insurance policies, and online accounts. You do not have to ask for them immediately, but ensure that you have some way to access them in the case that your mother/grandmother may ever need you to take responsibility of her finances. Our caregiver booklet offers more information on what types of documents you may need in the case of becoming a caregiver.

May is also Older Americans Month’s, and to celebrate its motto, “Safe today. Healthy Tomorrow.” we also suggest that your conversation includes a discussion about financial scams and fraud. Scammers often target older adults because they tend to live alone, are more trusting, and have a relatively high net worth with their retirement nest eggs. Discuss common scams with her so she knows about them beforehand and is less likely to be persuaded by those who contact her. If helpful, practice refusal scripts with her, and tell her to keep one by her phone so it is available should she need it. Our guide, Protecting Mother from Financial Fraud and Abuse, as well as our caregiver booklet, include other suggestions for prevention techniques you can practice together. Make sure she also knows who to contact should any form of abuse occur or if she feels she is being targeted by anyone. Preparing and making your mother/grandmother safe now will ensure her finances are healthy tomorrow.

Feel like the conversation isn’t enough? Consider giving her WISER’s free, easy to download e-book What Women Need to Know About Retirement, or Not Your Mother’s Retirement, which is a compilation of essays by 20 retirement experts including WISER’s President, Cindy Hounsell. If books are not right for her, you can buy her a subscription to our newsletter so she can receive future financial tips and explanations.

WISER

About Us

WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

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